City’s telephone service tax rakes in millions

Friday

May 31, 2013 at 12:01 AMMay 31, 2013 at 1:56 PM

Andrew Denney

The city of Columbia levies a 7 percent gross receipts tax on telephone service providers doing business in the city, which brought the city $3.76 million in revenue in its 2012 fiscal year, city Finance Director John Blattel told After Deadline this afternoon.

As we reported today, the city of Columbia and 116 other local governments in Missouri are defendants in lawsuit filed this month by CenturyLink, a Louisiana-based telecommunications company claiming that, because local tax laws were not written with more recent additions to the company’s menu of services in mind, the company should not have to pay local taxes on the portion of its revenue that it generates from products like directory and voicemail services.

Blattel was named in his official capacity as a defendant in a lawsuit CenturyLink filed in the Boone County Circuit Court, which also names the cities of Ashland, Centralia and Hallsville and their respective city clerks.

In fiscal 2012, the city collected $896,479 from CenturyLink through its telephone tax and also collected an additional $187,000 from the company through a 5 percent gross receipts tax on local cable TV service providers, Blattel said.

For the past four months, CenturyLink has paid "under protest" taxes to the city of Columbia for revenue it says the city does not have the legal authority to tax.

Blattel said the company has paid about $90,000 so far under protest, and said that the city must keep the "under protest" payments in a separate fund while litigation continues.

Revenue collected from the city’s telephone service tax goes into its general revenue fund. For its cable TV tax, 30 percent of revenue is allocated to the general fund while the remainder revenue is routed into the city's Public Communications fund.

The cable TV tax was estimated to bring in more than $282,000 in fiscal 2012, according to the city’s adopted budget for the current fiscal year.

When combined with gross receipts taxes levied on electric and natural gas providers in the city, gross receipts taxes brought in more than $7.2 million for the city in fiscal 2012.

For a larger perspective, the city expected to bring in almost $65 million from its various taxes in the current fiscal year, which would make up 17 percent of its estimated revenue collections.

According to a company report on CenturyLink featured on the website for national law firm Davis Wright Tremaine, CenturyLink is the country’s third-largest telecom provider based on the number of its total access lines.

The report states that the company brought in $15 billion in revenue in the 2011 calendar year, up from about $7 billion in the previous year.

The report states that the company has been gobbling up providers in smaller, regional markets in the last few years and in the process the company “has taken on a lot of debt to support its acquisitive streak.”